Budget proposals 2014-2015: elimination of FED demanded on locally manufactured motor vehicles 1800cc or above

KARACHI: The business industry has demanded the government to eliminate federal excise duty (FED) on locally manufactured motor vehicles of 1800cc and above those who are falling under HS code 8703 category.
As exemption of FED will benefit consumers from high end locally produced vehicles at reasonable prices and will lead to higher volume of such vehicles, with significant additional contribution to national exchequer.
However, through Finance Act, 2013 FED was levied on motor vehicles of 1800cc and above, falling under HS code 8703 category. This has significantly affected the price and volume of locally produced vehicles, which are being produced locally after huge amount of investments.
The business industry also recommended that withholding income tax should be collected on the import of new and used motor vehicles at the time of registration.
It is believed that it will broaden tax net, will lead to increase in documentation and increase in Government of Pakistan revenue.
It will also provide a level playing field to local automotive industry against imported vehicles, either being new or used.
It said that advance income tax u/s 231B is collected at the time of registration only on new locally manufactured motor vehicles, whereas the same is not applicable on imported whether new and used vehicles.
The business industry said that this leads to higher amount of taxes on locally produced vehicles in comparison with others and creates disparity among consumers of locally produced and imported vehicles.

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